IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES: `D', NEW DELHI
BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER
AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 5151/Del/2016
AY: 2006-07
&
ITA No. 5152/Del/2016
AY: 2007-08
Jindal Stainless Ltd. DCIT, Circle 13(2)
O.P. Jindal Marg vs. New Delhi
Hisar
PAN: AABCJ1969M
(Appellant) (Respondent)
Assessee by : Sh. Neeraj Jain, Adv.
Sh. Abhishek Agarwal, C.A.
Department by : Ms. Naina Soin Kapil, Sr.D.R.
Date of Hearing : 31/01/2019
Date of Pronouncement: 06/02/2019
ORDER
PER BEENA A PILLAI, JUDICIAL MEMBER
Present penalty appeals have been filed by assessee against
order dated 28/07/16 and 29/07/16 passed by Ld. CIT (A)-37
for Assessment Years 2006-07 and 2007-08 respectively on
following grounds of appeal:
ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
ITA 5151/Del/16 AY 2006-07
1. That on the facts and circumstances of the case and in law, the
order passed by the CIT(A) levying penalty under section 271(1)(c)
of the Income-tax Act (`the Act') is beyond jurisdiction, bad in law
and void ab-initio.
2. That Commissioner of Income Tax (Appeals) [`CIT(A)'] erred on
the facts and in law in upholding the action of the assessing officer
in levying penalty of Rs. 10,21,255 under section 271(1)(c) ) of the
Act in respect of (i) transfer pricing adjustment of Rs. 28,89,032 on
the transaction of export of stainless steel coil and (ii) Rs. 1,45,001
with respect to disallowance of donation expense, made in the
assessment order passed under section 143(3) read with section
92CA(3) of Act.
3. That on the facts and in the circumstances of the case and in
law, the CIT(A) erred in not appreciating that the penalty
proceedings were initiated without recording proper satisfaction in
the assessment order passed under section 143(3) of the Act and
levy of penalty, therefore, was unlawful and is liable to be
dropped.
4. That the C1T(A) erred on facts and in law in not appreciating
that there was no concealment or furnishing of inaccurate
particulars of income with respect to (i) transfer pricing adjustment
of Rs. 28,89,032 on the transaction of export of stainless steel coil
and (ii) Rs. 1,45,001 with respect to disallowance of donation
expense made in the assessment order and therefore, there was
no warrant to impose penalty under section 271(1)(c) of the Act.
5. That the CIT(A) erred on facts and in law in not appreciating that
penalty proceedings are independent from assessment
proceedings and therefore, only because an addition have been
sustained in appeal against the appellant, penalty under section
271(1)(c) is not automatically leviable.
6. That the Commissioner of Income-tax (Appeals) erred on facts
and in law in holding that the explanation tendered by the
appellant was not bonafide and tenable in law and also the
appellant did not discharge onus / burden of proof cast on him till
date.
7. That the Commissioner of Income-tax (Appeals) erred on
facts and in law in holding that the appellant failed to establish
existence of due diligence good faith and, therefore, too, penalty
under section 271(1)(c) of the Act was leviable.
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
8. That the CIT(A) erred on facts and in law in holding that the
explanation of the appellant on account export of steel products
aggregating to Rs. 28,89,032 was found to be incorrect and, thus,
the same tantamount to concealment of income, warranting
imposition of penalty under section 271(1)(c) of the Act.
9. That the Commissioner of Income-tax (Appeals) erred on facts
and in law in not appreciating that the international transaction of
export of stainless steel coils was duly reported as international
transaction in the Transfer Pricing study and 3CEB certificate and
all information and documents in relation thereto were placed on
record and merely for the reason that the transfer pricing
adjustment has been made on this account, it cannot be alleged
that the appellant furnished inaccurate particulars of income, so as
to levy penalty under section 271(1 )(c) of the Act.
10. That the CIT(A) erred on facts and in law in holding that the
explanation of the appellant on account unsubstantiated claim of
donation amounting to Rs. 1,45,001 was found to be incorrect and,
thus, the same tantamount to concealment of income, warranting
imposition of penalty under section 271(1 )(c) of the Act.
The appellant craves leave to add, amend, alter and vary the
above grounds of appeal on or before the date of hearing."
ITA No.5152/Del/2016
1. That on the facts and circumstances of the case and in law, the
order passed by the CIT(A) levying penalty under section 271(1)(c)
of the Income-tax Act (`the Act') is beyond jurisdiction, bad in law
and void ab-initio.
2. That Commissioner of Income Tax (Appeals) [`CIT(A)'] erred on
the facts and in law in upholding the action of the assessing officer
in levying penalty of Rs. 2,47,83,673/- under section 271(1)(c) ) of
the Act in respect of transfer pricing adjustment of Rs.
2,47,83,673/- on the transaction of export of stainless steel coils
made in the assessment order passed under section 143(3) read
with section 92CA(3) of Act.
3. That on the facts and in the circumstances of the case and in
law, the CIT(A) erred in not appreciating that the penalty
proceedings were initiated without recording proper satisfaction in
the assessment order passed under section 143(3) of the Act and
levy of penalty, therefore, was unlawful and is liable to be
dropped.
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
4. That the CIT(A) erred on facts and in law in not appreciating that
penalty was arbitrarily levied @ 100% of income allegedly sought
to be evaded, i.e. Rs.2,47,83,673/- which is not mandated under
the provisions of section 271(1)(c) of the Act and, therefore, levy of
penalty itself was bad in law and was liable to be dropped.
5. That the CIT(A) erred on facts and in law in not appreciating that
there was no concealment or furnishing of inaccurate particulars
of income with respect to transfer pricing adjustment of Rs.
2,47,83,673/- on the transaction of export of stainless steel coils
made in the assessment order and therefore, there was no
warrant to impose penalty under section 271(1)(c) of the Act.
6. That the CIT(A) erred on facts and in law in not appreciating that
penalty proceedings are independent from assessment
proceedings and therefore, only because an addition have been
sustained in appeal against the appellant, penalty under section
271(1)(c) is not automatically leviable.
7. That the Commissioner of Income-tax (Appeals) erred on facts
and in law in holding that the explanation tendered by the
appellant was not bonafide and tenable in law and also the
appellant did not discharge onus / burden of proof cast on him till
date.
8. That the Commissioner of Income-tax (Appeals) erred on
facts and in law in holding that the appellant failed to establish
existence of due diligence good faith and, therefore, too, penalty
under section 271(1)(c) of the Act was leviable.
9. That the CIT(A) erred on facts and in law in holding that the
explanation of the appellant on account export of steel products
aggregating to Rs. 2,47,83,673/- was found to be incorrect and,
thus, the same tantamount to concealment of income, warranting
imposition of penalty under section 271(1)(c) of the Act.
10. That the Commissioner of Income-tax (Appeals) erred on facts
and in law in not appreciating that the international transaction of
export of stainless steel coils was duly reported as international
transaction in the Transfer Pricing study and 3CEB certificate and
all information and documents in relation thereto were placed on
record and merely for the reason that the transfer pricing
adjustment has been made on this account, it cannot be alleged
that the appellant furnished inaccurate particulars of income, so as
to levy penalty under section 271(1 )(c) of the Act.
The appellant craves leave to add, amend, alter and vary the
above grounds of appeal on or before the date of hearing."
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
2. Brief facts of the case are as under:
Assessee filed its return of income on 23/11/06 for Assessment
Year 2006-07 declaring total income of Rs.83,00,83, 200/-and for
Assessment Year 2007-08 the return of income was filed on
31/01/11 on total income of Rs.261,06,90,840/-. Assessment
under section 143 (3) read with 144C was passed by Ld.AO after
making TP adjustments, disallowance under section 14 A,
interest de-capitalisation, bad debts disallowance, which were
common for both years under consideration. Additionally, for
assessment year 2006-07, Ld.AO disallowed deduction claimed
under section 80 IA and section 80 G and for Assessment Year
2007-08, disallowance on computer peripherals were made.
3. Aggrieved by additions made, assessee preferred appeal
before Ld.CIT(A), who confirmed addition made by Ld.AO, on
transfer pricing adjustment for both years under consideration
and disallowance of donation under section 80 G for Assessment
Year 2006-07.
4. In the meanwhile penalty proceedings were initiated by
Ld.AO and penalty was levied at 100% of income sought to be
evaded for both years under consideration.
5. Aggrieved by penalty levied, assessee preferred appeal
before Ld.CIT (A) who confirmed penalty.
6. Aggrieved by order of Ld.CIT (A), assessee is in appeal before
us now.
7. Ground No. 1, 3, 5, 6 and 7 are general in nature and
therefore do not require any adjudication.
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
8. Ground No. 2 (i), 4 (i), 8 and 9 are in respect of penalty
levied on transfer pricing adjustment.
8.1. It has been submitted that transfer pricing adjustment is
due to difference in arm's length price of international
transaction of export of stainless steel coils, difference in interest
rate on loan charged from associated enterprises, adjustment on
account of corporate guarantee given to AE.
8.2. Ld.Counsel at outset submitted that, in quantum
proceedings for both years under consideration, this Tribunal set
aside addition made on account of transfer pricing adjustment
back to Ld.TPO for readjudication, in light of submissions/details
filed by assessee.
8.3. Ld.Counsel placed before us orders passed by this Tribunal
in quantum proceedings for assessment year 2006-07 and 2007-
08 which has been perused by us.
9. We are therefore inclined to set aside penalty proceedings
back to Ld.AO by keeping all contentions open for assessee. The
Ld.CIT DR do not object penalty proceedings being set aside back
to Ld. AO for reconsideration.
9.1. Accordingly Ground No. 2 (i), 4 (i), 8 and 9 raised by
assessee for both years under consideration are allowed for
statistical purposes.
10. Ground No. 2 (ii), 4 (ii) and 10 are in respect of sustained
claim of donation amounting to Rs.1,45,001/-. It is observed that
before Tribunal this issue was never agitated by assessee in
quantum proceedings and in order passed by Ld.CIT (A) placed
at page 23-70 of paper book for assessment year 2006-07
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
assessee had not pressed this ground accordingly it was
dismissed.
11. Before us Ld.Counsel did not advance any submissions
regarding penalty levied on disallowance of donation.
11.1. Accordingly the ground is dismissed.
12. In the result appeal filed by assessee for assessment
year 2006-07 is partly allowed for statistical purposes and
appeal for assessment year 2007-08 is allowed for statistical
purposes.
Order pronounced in the open court on 06th February, 2019.
Sd/- Sd/-
( PRASHANT MAHARISHI) (BEENA A PILLAI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dt. 06th February, 2019
Gmv
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
- TRUE COPY -
By Order,
ASSISTANT REGISTRAR
ITAT Delhi Benches
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ITA Nos. 5151/Del/16 & 5152/Del/16 AYs:2006-07 and 2007-08
Jindal Stainless Ltd.
Date
Draft dictated on 04.02.2019
Draft placed before author 04.02.2019
Draft proposed & placed before the second 05.02.2019
member
Draft discussed/approved by Second
Member.
Approved Draft comes to the Sr.PS/PS 06.02.19
Kept for pronouncement on 06.02.19
&
Order uploaded on :
File sent to the Bench Clerk
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.
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